Q4 2023 Equitrans Midstream Corp Earnings Call

February 20, 2024

Operator: Good morning, and welcome to Equitrans Midstream Corporation's fourth quarter 2023 earnings call. All participants are in a listen-only mode.

Good morning, and welcome to equity <unk> Midstream Corporation fourth quarter 2023 earnings call.

All participants are in a listen only mode.

Operator: After the speaker's presentation, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Anthony DeFabio, Treasurer and Director of Investor Relations. Thank you.

The speaker's presentation, we will conduct a question and answer session.

To ask a question you will need to press star followed by the number one on your telephone keypad.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Anthony Difabio, Treasurer, and director of Investor Relations.

Anthony Difabio: Please go ahead.

Anthony DeFabio: Good morning, and welcome to the fourth quarter 2023 earnings call for Equitrans Midstream Corporation. A replay of this call will be available for 14 days beginning this time. The phone number for the replay is 800-770-2030 or 647-362-9199. The conference ID is 662-5542. Statements on today's call may contain forward-looking statements related to future events and expectations. Please refer to today's news release and the risk factors in ETRN's Form 10-K for the year ended December 31st, 2022, and as updated by Form 10-Q's for factors that could cause the actual results to differ materially from these forward-looking statements. Also, the Form 10-K for the year ended December 31st, 2023, is expected to be filed with the SEC later today. Today's call may contain certain non-GAAP financial measures.

Anthony Difabio: Good morning, and welcome to the fourth quarter 2023 earnings call for <unk> Midstream Corporation.

Anthony Difabio: A replay of this call will be available for 14 days beginning this evening.

Anthony Difabio: The phone number for the replay is 870 7020.

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Anthony Difabio: Or 64736 to 9199.

Anthony Difabio: The conference I'd 606 to $5 five for two.

Anthony Difabio: Today's call may contain forward looking statements related to future events and expectations.

Anthony Difabio: Please refer to today's news release and risk factors in <unk> Form 10-K for the year ended December 31 2022.

Anthony Difabio: And as updated by form 10, Qs for factors that could cause the actual results to differ materially from these forward looking statements.

Anthony Difabio: Also the Form 10-K for the year ended December 31, 2023 is expected to be filed with the SEC later today.

Anthony Difabio: Today's call may contain certain non-GAAP financial measures.

Anthony DeFabio: Please refer to this morning's news release and our investor presentation for important disclosures regarding such measures, including reconciliations to most comparable gap financial measures. On the call today are Diana Charletta, President and CEO. Kirk Oliver, Executive Vice President and Chief Financial Officer. Justin Mackin, Executive Vice President, Pipeline Operations and Project Execution. Nate Tetlow, Senior Vice President, Commercial Services; Janice Brenner, Senior Vice President, Finance and Investor Relations; and Brian Patrandrea, Vice President and Chief Accounting Officer. After the prepared remarks, we will open the call to questions. With that, I'll turn it over to Diana. Thanks, Anthony, and good morning everyone.

Anthony Difabio: Please refer to this morning's news release, and our Investor presentation for important disclosures regarding such measures, including reconciliations to most comparable GAAP financial measure.

Anthony Difabio: On the call today are Diana short letter President and CEO.

Anthony Difabio: Kirk Oliver Executive Vice President and Chief Financial Officer.

Anthony Difabio: Justin Macken Executive Vice President pipeline operations and project execution.

Anthony Difabio: Nate Tetlow senior Vice President commercial services.

Anthony Difabio: Janice Brenner senior Vice President Finance and Investor Relations.

Anthony Difabio: And Brian to Treasurer, Vice President and Chief Accounting Officer.

Anthony Difabio: After the prepared remarks, we will open the call to questions.

Anthony Difabio: With that I'll turn it over to Diana.

Diana: Thanks, Anthony and good morning, everyone. As many of you know effective January 1st Tom Karam moved into the role of executive Chairman.

Diana M. Charletta: As many of you know, effective January 1st, Tom Karam moved into the role of executive chairman. Thomas has led Equitrans for the past five years since we started as a stand-alone company. We want to thank him for his unwavering effort and continued support.

Diana: Amazon Echo chance for the past five years since we started as a Standalone company, we want to thank him for his unwavering efforts and continued support.

Diana M. Charletta: Before we jump into the business discussion, I want to address the statement from this morning's news release. Our board has been engaged in a process with third parties that have expressed interest in strategic transactions with us. We are not surprised by this interest, given the expected near-term completion of MVP and our view of the strength of our assets. Our board has engaged outside advisors, and the process is ongoing. As you may expect, we will not be addressing questions on this matter.

Speaker Change: Before we jump into the business discussion I want to address the statement from this mornings news release.

Speaker Change: Our board has been engaged in a process with third parties that have expressed interest in strategic transactions with that we are.

Speaker Change: Not surprised by this interest given the expected near term completion of MVP and our view of the strength of our assets are gorgeous engaged outside advisors and the process is ongoing as you may expect we will not be addressing questions on this matter.

Diana M. Charletta: Moving on to the business update, our priority remains bringing MVP into service safely, which includes a steadfast focus on the project's environmental protocols and maintaining permitting compliance. This morning, we updated our targeted completion to the 2nd quarter of 2024 at a total estimated project cost ranging from approximately $7.57 billion to approximately $7.63 billion. Following the passing of the Fiscal Responsibility Act of 2023, we have made substantial construction progress. As we exited 2023, we continued to track to our prior guidance, despite challenging construction conditions, which caused lower productivity than we forecasted. In addition to unforeseen construction issues, throughout much of January, we encountered significantly adverse weather conditions, including precipitation well above 20-year averages.

Speaker Change: Moving on to the business update.

Speaker Change: Our priority remains bringing MVP into service safely, which includes a steadfast focus on the projects environmental protocol and maintaining permitting couponing it.

Speaker Change: This morning, we updated our targeted completion to the second quarter of 2024 at a total estimated project costs ranging from approximately $757 billion to approximately $7 three.

Speaker Change: $3 billion.

Speaker Change: Following the passing of the fiscal responsibility Act of 2023, we have made substantial construction progress.

Speaker Change: As we exited 2023, we continue to track to our prior guidance, despite challenging construction conditions, which caused lower productivity than we forecasted and.

Speaker Change: In addition to unforeseen construction issues.

Speaker Change: Much of January we encountered considerably adverse weather conditions, including precipitation well above 20 year averages.

Diana M. Charletta: While our construction plans took into account the potential effects of winter weather, these conditions were far worse and lasted much longer than anticipated, which had a significant impact on productivity, which in turn impacted our ability to reduce construction headcount. These factors resulted in our updated timing and total project cost targets. More recently, the weather has been favorable, and our productivity rates have shown improvement. As of February 15, roughly 300 miles of pipe had been installed, leaving less than 4 miles remaining. Of the 428 water crossings that remained when construction resumed in 2023, we had 13 left to crack.

Speaker Change: While our construction plans took into account the potential effects of winter weather. These conditions were far worse and lasted much longer than anticipated, which had a significant impact on productivity, which in turn impacted our ability to reduce construction head count. These.

Speaker Change: These factors resulted in our updated timing and total project cost target.

Speaker Change: More recently, the weather has been favorable and our productivity rates have shown improvement as.

Speaker Change: As of February 15th roughly 300 miles of pipe had been installed leaving less than four miles remaining of the 428 water crossings that remained when construction resumed in 2023, we had 13 left to crops.

Diana M. Charletta: We have purged and packed through the first 77 miles of the project and hydro-tested just about 180 miles, and progress continues every day. If the current weather conditions continue by the time we exit February, we expect to have further narrowed the list of overall construction tasks, and the remaining construction is expected to be limited to three of the Project 9 working spreads, all in Virginia. The construction work in these areas will consist of finishing the remaining crossings, of which five are boards, completing the Appalachian Trail crossing, and installing pipe on some of the steepest slips along the route.

Speaker Change: We are encouraged impact through the first 77 miles of the project.

Speaker Change: Hydro test at just about 180 miles and progress continues every day.

Speaker Change: If the current weather conditions continue by the time, we exit February we expect to have further narrowed the list.

Speaker Change: Overall construction time and the remaining construction is expected to be limited to three of the projects signed working spreads all in Virginia.

Speaker Change: The construction work in these areas will consist of finishing the remaining processing of which fiberboard completing the Appalachian trail crossing and installing pipe on some of the FIFA slips along the route.

Diana M. Charletta: Once construction is complete, only commissioning activities will remain before we place the pipe in service, which are less impacted by weather and require far less labor. However, while the majority of MVP construction is complete, the remaining construction includes some of the most difficult tasks on the project and could present further challenges. We are narrowing the scope of remaining activities, and our focus remains to safely bring this critical pipeline into service. I'll now turn it over to Justin for the operations update, and then Kirk will discuss the financial results. Thanks, Diana. Good morning, everyone.

Speaker Change: Once construction is complete only commissioning activities will remain before we place the pipe in service, which are less impacted by weather and require far less labor.

Speaker Change: While the majority of MVP construction is complete the remaining construction includes some of the most difficult path on the project and could present further challenges we are narrowing the scope of the remaining activities and our focus remains to safely bring this critical pipeline into service.

Speaker Change: I'll now turn it over to Justin for the operations update and then Kirk will discuss the financial results.

Justin Macken: Thanks, Diana good morning, everyone, let's start with our gathering segment.

Justin Mackin: Let's start with our gathering set. In 2023, we averaged about 7.7 VCF per day of gathered volumes, which was roughly flat year over year. For 2024, we expect gathered volumes to again be flat on a year over year basis as we continue to see producers remain at maintenance levels. Our Hammerhead asset continued to provide interruptible service in the fourth quarter, and we will be ready to reverse flow and make deliveries to MVP when Hammerhead achieves full commercial in-service alongside MVP's in-service and firm commitments commence. In 2023, we also made progress on a compression project for a producer customer who installed 32,000 horsepower of booster compression that is backed by a long-term firm commitment and is expected to be in service in the coming day. The majority of capital investment for this project was in 2020. Our gathering and transmission systems are highly integrated and currently provide the only direct upstream connectivity to MVP.

Justin Macken: In 2023, we averaged about seven seven Bcf per day of gathered volumes, which was roughly flat year over year.

Justin Macken: For 2024, we expect gathered volumes to again be flat on a year over year basis, as we continue to see producers remain at maintenance levels.

Justin Macken: Our hammerhead assets continued to provide interruptible service in the fourth quarter, and we will be ready to reverse flow and make deliveries to MVP hammerhead achieves full commercial in service alongside MVP in service and firm commitments to <unk> and.

Justin Macken: In 2023, we also made progress on a compression project for a producer customer who installed 32000 horsepower of booster compression that is backed by a long term firm commitments and is expected to be in service in the coming days the.

Justin Macken: City of capital investment for this project was in 2023.

Justin Macken: Our gathering and transmission systems are highly integrated and currently provide the only direct upstream connectivity to MVP.

Justin Mackin: MVP and the potential expansion project would add approximately two and a half BCF per day of takeaway capacity to an area of the basin that has been constrained for several years. Given this dynamic, combined with the growing demand in the Southeast and expected improvements to TETCO M2 pricing with MVP in service, we believe that over the next several years, there is a path for volume growth within the Basin following MVP's entry into service. Today, we initiated 2024 Gathering CapEx guidance of $210 million to $260 million. Moving on to transmission, we are nearing completion of the Ohio Valley Connector Expansion Project, or OVCX, which we expect to place in service in the 2nd quarter of 2024. OVC-X will add about 350 million cubic feet of incremental capacity per day. Once the expansion is complete, our OVC pipeline will have the ability to move over 1.2 billion cubic feet of gas per day to Clarington, Ohio.

Justin Macken: <unk> and the potential expansion projects would add approximately two five bcf per day.

Justin Macken: Kuwait capacity to an area of the basin.

Justin Macken: Been constrained for several years.

Justin Macken: Given this dynamic combined with the growing demand in the southeast and expected improvements to <unk> pricing with MVP in service, we believe that over the next several years there is a path for volume growth within the basin following MVP in service.

Justin Macken: Today, we initiated 2020 for gathering capex guidance of $210 million to $260 million.

Justin Macken: Moving on to transmission, we are nearing completion of the Ohio Valley connector expansion projects or <unk>, which we expect to place in service in the second quarter of 2024 <unk>.

Justin Macken: <unk> will add about 350 million cubic feet per day of incremental capacity.

Justin Macken: Once the expansion is complete our obesity pipeline will have the ability to move over one 2 billion cubic feet per day of gas declaring it in Ohio.

Justin Mackin: and can also provide backhaul capacity to reach MVP with the same capacity, enhancing base and liquidity, and providing customers significant optionality. Our 2024 transmission CapEx guidance is $75 million to $85 million, which includes approximately $40 million for the OVC-X project. In December, the MVP joint venture executed 20-year binding precedent agreements with two Southeast Utility customers for the amended Southgate Kroth.

Justin Macken: And can also provide backhaul capacity to reach MVP with the same capacity.

Justin Macken: Hedging based on liquidity and providing customers significant optionality.

Justin Macken: Our 2020 for transmission Capex guidance was 75 million to.

Justin Macken: $85 million, which includes approximately $40 million for the <unk> project.

Justin Macken: In December the MVP joint venture executed 20 year binding precedent agreements with two southeast utility customers for the amended Southgate project.

Justin Mackin: In aggregate, the firm capacity commitments total 550 million cubic feet per day. The joint venture recently completed an open season and expects to finalize the project scope in the coming month. Currently, the Southgate project is targeted to be completed in June 2028. On the water segment, in 2023, we completed the majority of our mixed-use water system. For 2024, our water capital expenditure is expected to be approximately $25 million to $35 million. I'll now turn the call over to you. Thanks, Justin, and good morning, everyone.

Justin Macken: In aggregate the firm capacity commitments totaled 550 million cubic feet per day.

Justin Macken: The joint venture recently completed an open season and expects to finalize the project scope in the coming months currently the Southgate project is targeted to be completed in June 2028.

Justin Macken: On the water segment in 2023, we completed the majority of our mixed use water system for.

Justin Macken: For 2020 for our water Capex is expected to be approximately 25 million to $35 million.

Justin Macken: I'll now turn the call over to Kirk.

Kirk R. Oliver: Thanks, Justin and good morning, everyone.

Kirk R. Oliver: This morning, we reported full-year net income attributable to E-Train common shareholders of approximately $387 million, and Irving's per diluted common share of 89 cents. That revenue for the year was $455 million, adjusted EBITDA was $1,056,000,000, and Deferred Revenue was $320,000. We also reported full-year net cash provided by operating activities of approximately $1 billion.

Kirk R. Oliver: This morning, we reported full year net income attributable to <unk> common shareholders of approximately $387 million and earnings per diluted common share of 89.

Kirk R. Oliver: Net income for the year was $455 million adjusted EBITDA was $1 $56 million.

Kirk R. Oliver: And deferred revenue was $329 million.

Kirk R. Oliver: We also reported full year net cash provided by operating activities of approximately $1 billion.

Kirk R. Oliver: The free cash flow was negative $129 million. For the fourth quarter, we reported net income attributable to E-Train common shareholders of $134 million, and earnings per diluted common share of 31. That revenue was $150 million, adjusted EBITDA was $272 million, and deferred revenue was $88 million. We also reported net cash provided by operating activities. $291 million and a pre-cash flow of negative $241 million. The income attributable to E-Train common shareholders for the full year was impacted by several items.

Kirk R. Oliver: On free cash flow of negative $129 million.

Kirk R. Oliver: For the fourth quarter, we reported net income attributable E train common shareholders of $134 million and earnings per diluted common share of <unk> 31.

Kirk R. Oliver: Net income was $150 million adjusted EBITDA was $272 million.

Kirk R. Oliver: And deferred revenue was $88 million.

Kirk R. Oliver: We also reported net cash provided by operating activities of $291 million and free cash flow of negative $241 million.

Kirk R. Oliver: Net income attributable to E train common shareholders for the full year was impacted by several items.

Kirk R. Oliver: First, by $9.4 million of operating expenses related to the Rager Mountain Storage Incident. Second, a $7.8 million write-down of a contract asset in the water segment, and last, a $1.5 million unrealized gain on derivative instruments, which is reported within other. This relates to the contractual provision entitling E-Train to receive cash payments from EQT under conditions on specific Nimex and Rehub natural gas prices Exceeding Certain Thresholds, Post-MVPs in Service, and Through 2024. After adjusting for these items, full-year adjusted net income attributable to E-Train common shareholders was $398 million, and Adjusted Earnings per Diluted E-Train Common Share was 91. The fourth quarter was impacted primarily by a $5.9 million unrealized loss on derivative instruments related to the contractual provision with EQT mentioned earlier.

Kirk R. Oliver: First by $9 $4 million of.

Kirk R. Oliver: <unk> expense related to the radar mountain storage incident.

Kirk R. Oliver: Second a seven $8 million write down of a contract asset in the water segment and.

Kirk R. Oliver: And last a $1 5 million unrealized gain on derivative instruments, which is reported within other income.

Kirk R. Oliver: This relates to the contractual provision entitling E train to receive cash payments from EQT.

Kirk R. Oliver: Conditioned on specific Nymex Henry hub natural gas prices exceeding certain thresholds post MVP in service and through 2024.

Kirk R. Oliver: After adjusting for these items full year adjusted net income attributable to <unk> common shareholders was $398 million.

Kirk R. Oliver: And adjusted earnings per diluted E train common share was <unk> 91.

Kirk R. Oliver: The fourth quarter was impacted primarily by a $5 $9 million unrealized loss on derivative instruments.

Kirk R. Oliver: Related to the contractual provision with EQT mentioned earlier.

Kirk R. Oliver: After adjusting for this, Q4 adjusted net income attributable to E-Train common shareholders was $139 million, and adjusted earnings per diluted share was $0.32. Additionally, we reported full-year equity income of $175 million. 4th quarter equity income of $78 million is primarily associated with AFUDC relating to MVP construction. Operating revenue for the full year increased by $36 million compared to last year, which was primarily driven by increased transmission and water service revenue and was partially offset by lower gathering revenue.

Kirk R. Oliver: After adjusting for this Q.

Kirk R. Oliver: Q4, adjusted net income attributable to <unk> common shareholders was $139 million and adjusted earnings per diluted share was 32.

Kirk R. Oliver: Additionally, we reported full year equity income of $175 million in fourth quarter equity income of $78 million.

Kirk R. Oliver: Which is primarily associated with <unk> relating to MVP construction.

Kirk R. Oliver: Operating revenue for the full year increased by $36 million compared to last year, which was primarily driven by increased transmission and water service revenue and was partially offset by lower gathering revenue.

Kirk R. Oliver: Revenue for the 4th quarter of 2023 increased by $5.4 million compared to the 4th quarter of 2022, primarily as a result of increased gathered volume, partially offset by lower water. Operating expenses for the full year increased by approximately $89 million compared to 2022, due to increased SG&A and O&M costs, primarily due to an increase in personnel costs related to the MVP performance award and other incentive compensation, as well as an increase in water expenses, including the $7.8 million contract asset write-down and increased appreciation expense. Operating expenses for the fourth quarter of 2023 were roughly flat compared to the same quarter of 2022. For the fourth quarter of 2023, E-Train paid a cash dividend of 15 cents per common share on February 14, 2024 to shareholders' records at the close of business on February 6, 2024.

Kirk R. Oliver: Revenue for the fourth quarter of 2023 increased by $5 4 million compared to the fourth quarter of 2022.

Kirk R. Oliver: Ordinarily as a result of increased gathered volumes, partially offset by lower water volumes.

Kirk R. Oliver: Operating expenses for the full year increased by approximately $89 million compared to 2020 to.

Kirk R. Oliver: Due to increased SG&A in O&M costs.

Kirk R. Oliver: Primarily due to an increase in personnel costs related to the MVP performance award and other incentive compensation as well as an increase in water expenses.

Kirk R. Oliver: <unk>, the $7 $8 million contract asset write down and increased depreciation expense.

Kirk R. Oliver: Operating expenses for the fourth quarter of 2023 were roughly flat compared to the same quarter for 2022.

Kirk R. Oliver: For the fourth quarter of 2023 E train paid a cash dividend of <unk> 15 per common share on February 14.

Kirk R. Oliver: 124 to shareholders of record at the close of business on February six 2024.

Kirk R. Oliver: Finally, today we initiated guidance for 2024. For the full year, we're forecasting net income of $375 million to $455 million, and Justin Iveda of $1.235 to $1.315 billion, and Deferred Revenue of approximately $145 million.

Kirk R. Oliver: Finally today, we initiated guidance for 2024.

Kirk R. Oliver: For the full year, we're forecasting net income of 375 million to $455 million.

Kirk R. Oliver: Adjusted EBITDA of 1235.

Kirk R. Oliver: 131, $5 billion and deferred revenue of approximately $145 million.

Diana M. Charletta: We're also forecasting full-year CapEx and capital contributions of $850 to $955 million, free cash flow of negative $65 million to negative $145 million, and retained free cash flow of negative $325 million to negative $405 million. I'll now hand the call back to Diana. Thanks, Kirk. Before we open the call to questions, I would like to take a minute to thank our employees. They remain endlessly committed to E-Train success through their ongoing commitment to safety and environmental compliance.

Kirk R. Oliver: We're also forecasting full year Capex <unk> capital contributions of $850 million to $955 million free cash flow of negative $65 million to negative $145 million and retained free cash flow of negative 325 million to negative 405.

Kirk R. Oliver: I'll now hand, the call back to Doug here.

Doug: Thanks, Craig before we open the call to questions I would like to take a minute to thank our employees.

Doug: And we're fully committed to <unk> success for their ongoing commitment to safety and environmental compliance.

Operator: And with that, we'll open the call to questions. As a reminder, to ask a question, please press the star followed by the number one on your telephone keypad.

Doug: Thank you and with that we'll open the call to questions.

Doug: As a reminder to ask a question. Please press star followed by the number one on your telephone keypad to withdraw any questions. Please press star one again.

Operator: To withdraw any questions, please press star one again. Our first question comes from Spiro Dunis from Citi. Please go ahead; your line is open. Thanks, operator. Good morning, everybody.

Doug: Our first question comes from Spiro <unk> from Citi. Please go ahead. Your line is open.

Spiro: Thanks, operator, good morning, everybody.

Justin Mackin: I would, of course, have loved to have started with the strategic process, but it sounds like that's out of bounds today. So maybe start with the MVP expansion, the opportunity there, and think about how to incorporate some value. Just curious if you could speak to maybe some of the returns you'd expect from a project like that. I believe it's just compression, and not to get too ahead of it, but is it expandable beyond half of the day if you do looping and compression as well? Hi, this is Justin.

Spiro: And of course, we'd love to starting with the strategic process, but it sounds like that's out of bounds today. So.

Spiro: Maybe start with the MVP expansion and the opportunity there.

Spiro: Thinking about it incorporates some value just curious if you all could speak to maybe some of the returns you would expect from a project like that I believe it's just compression.

Spiro: Not to get too ahead of it but is it expandable beyond and half of the day, if you do have looping and compression as well.

Justin Macken: Hi, This is Justin.

Justin Mackin: So, I guess starting with... scope, you know, we expect the expansion will probably be in the range of a half a BCF a day, as we've talked about previously. Based on where we have scoped out, the fourth greenfield compressor station and what we are physically able to add at the other stations, that's probably the sweet spot for expansion. Technically, there are ways to go above that, but we'll have to weigh the economics of doing so. You know, in terms of build multiples, you're probably looking in the three to four range because this is a very strong project limited to just the compression investment. Got it. That's a helpful color.

Justin Macken: So I guess starting with the scope.

Justin Macken: We.

Justin Macken: We expect the expansion will probably be in the range of a half a bcf a day as we've talked about previously.

Justin Macken: Based on where we have scoped out the fourth Greenfield compressor station and what we are physically able to add at the other stations, that's probably the sweet spot for expansion technically there are ways to go above that but we'll have to weigh the economics of doing so.

Justin Macken: In terms of build multiples youre, probably looking in the three to four range. Because this is a very.

Justin Macken: Strong projects limited to just the compression investment.

Speaker Change: Got it thats helpful color.

Diana M. Charletta: And maybe turn back to MVP Construction. Diana, I appreciate all the color on the process from here. It sounds like some of the more challenging routes are still ahead, but all kind of anticipated. I guess with that rain that you had mentioned, just looking at some of the local news reports, it seems like there were some runoff issues and potentially some local complaints. Just want to make sure all permits are still in good standing, and the weather issues have not triggered any sort of delays from an oversight perspective either. Yes, so the permits are all still good, and we are working very closely with the Virginia DQ and the other agencies. The inspectors are out there daily, and we are actually, I think that issue has cleared up a bit as far as the turbidity and working with the landowner there, but everything's been good. Great. I'll leave it there for today. Thanks for the time.

Speaker Change: And maybe turn it back to you to MVP construction Diane I appreciate all the color on the process from here.

Speaker Change: It sounds like some of the more challenging periods are still ahead, but all.

Speaker Change: I'll kind of anticipated I guess with that Randy you had mentioned just looking at some of the local news reports.

Randy: It seems like there was some runoff issues and potentially some local complaints just want to make sure can you just confirm all permits are still in good standing of the weather issues not triggered any sort of delays from an oversight perspective either.

Randy: Yes. So the permits are all still good working very closely with the Virginia, <unk> and the other agencies and the inspectors are out their daily and.

We are actually I think that issue has cleared up a bit as far as the turbidity.

Randy: Working with the landowners there, but everything is in good shape.

Speaker Change: Great I'll leave it there for today. Thank you for your time thank.

Operator: Thank you. Our next question comes from John McKay from Goldman Sachs. Please go ahead, your line is open. Hi, thanks for the time. Maybe I'll just pick up on that last point, because it's kind of the theme here.

Speaker Change: Thank you.

Speaker Change: Our next question comes from John Mackay from Goldman Sachs. Please go ahead. Your line is open.

Alright, thanks for the time, maybe I'll just pick up on that last point.

Diana M. Charletta: Just in terms of the new timeline, I think you're pointing to June 1 in service, at least kind of baked into your guidance. Curious just if you could frame that up. I mean, You know, it's a few months, you know, two months kind of past your prior benchmark; you've probably seen a month of delays. So just trying to think of how conservative you're feeling on that number right now. And, you know, maybe any more guideposts to watch from here.

John Mackay: Kind of theme here just in terms of the new timeline I think youre pointing to a June 1st in service.

John Mackay: At least kind of baked into your guidance I'm curious just if you could frame that up I mean, yes.

John Mackay: A few months to months kind of past.

John Mackay: Benchmark, you've probably seen a month of delays. So I'm just trying to think of how conservative you are feeling on that number right now.

Speaker Change: Maybe any more guidepost to watch from here. Thank you.

Diana M. Charletta: Sure. With every week of good weather, we're able to narrow the variability of that cost and that timing challenges obviously still remain, but they're decreasing with As we complete each task. February weather has been better, although we did have some rain.

Speaker Change: With every week of good weather, we're able to narrow the variability of that cost and that timing challenges, obviously still remain but they are decreasing with as we complete each task February weather has been better. We did have some rain I think the weekend before last but the next 10 days looks pretty good.

Diana M. Charletta: I think the weekend before last, but the next 10 days look pretty good. And that'll get us to the end of the month. So productivity has improved since January; daylight continues to increase, which lengthens our work day. We have a handful of boards left to complete and some steeps, but the work plan for April is substantially commissioning work. Which will require significantly fewer people and will not be as, you know, sensitive to weather.

Speaker Change: And that will get us to the end of the month. So productivity has been true since January daylight continues to increase which lengthens our workday.

Speaker Change: We have a handful of doors left to complete in some steep but the work planned for April is substantially commissioning work and which will require significantly less people and we will not business.

Speaker Change: Incentive to weather. So that's kind of that's kind of how I look at it we will finish up construction through March and April will mostly be commissioning.

Diana M. Charletta: So that's kind of that's kind of how I look at it. We will finish up construction through March, and April will mostly be, Just to clarify that, I think in the past you've talked about commissioning generally being about a month. Is that fair?

Speaker Change: Just to clarify that I think in the past you've talked about commissioning generally being about a month is that fair. Yes. That's our activities. We've been commissioning on the pipe line 77 announced already have gas and none in its purged impact, but we still have our third compressor station and we need to get gas to it which will happen sometime in March.

Diana M. Charletta: Yeah, that's our activity. We've been commissioning the pipeline. You know, 77 miles already have gas in them, and it's purged and packed.

Diana M. Charletta: But we still have our third compressor station, and we need to get gas to it, which will happen sometime in March. And then after we complete these other couple pieces, we'll hydrotest and work as we go. So about a month is a good time.

Speaker Change: And then after we complete these other couple pieces will hydro testing and work as we go.

Speaker Change: About a month.

Speaker Change: Ross.

Speaker Change: Thanks for that maybe maybe just second question here and thanks for that clarification.

Speaker Change: Some incremental leverage relief I think on the on your revolver, maybe Turkey. I guess this is for you maybe just frame that up in the context of the increased capex cost and how you're feeling about your.

Diana M. Charletta: Roth. Thanks for that. Maybe just a second question here. Thanks for that clarification.

Kirk R. Oliver: You got some incremental leverage relief, I think, on your revolver. Maybe, Kirk, I guess this is for you, maybe just frame that up in the context of the increased CapEx cost and how you're feeling about your buffer versus these new ceilings. Thanks. Yeah, we're feeling really good about the buffer. So what we did is, and the banks have been really good to work with on this, but we got the leverage covenant raised to six times, or Q1. 6.25 for Q2, and then it comes back to 5.85. 5.5

Speaker Change: Buffer versus these.

Speaker Change: Thanks.

Speaker Change: Feeling really good about the buffer so what we did is in.

The banks have been really good to work with on this but we got the leverage covenant raise two six times for Q1.

Speaker Change: $6 25 for Q2, and then it comes back to $5 85, and then down to five five on the following quarters.

Speaker Change: Alright. Thank you appreciate the time.

Speaker Change: Our next question comes from Michael Blum from Wells Fargo. Please go ahead. Your line is open.

Michael Blum: Thanks, Good morning, everyone, maybe we'll stay on the balance sheet since that was the last question.

Kirk R. Oliver: Thank you. I appreciate your time. Our next question comes from Michael Bloom from Wells Fargo. Please go ahead, your line is open. Thanks. Good morning, everyone.

Michael Blum: Wanted to just kind of get your thoughts on the dividend at this point as a lever given that clearly.

Diana M. Charletta: Maybe we'll stay on the balance sheet since that was the last question. I wanted to just kind of get your thoughts on the dividend at this point as a lever, given that, you know, clearly with all the CapEx spending that leverages higher. Any thoughts to reduce the dividend to free up some cash to accelerate the leverage? No, we haven't got any thoughts about doing that. We are focused on de-levering, and we have the MVP project financing that we will turn to as soon as MVP is in service, and that'll be a big chunk of that reduction right there. We've set, I think, $800 to $1 billion on that, and we are looking at possibly increasing that amount if we can in the market. Okay, I got it.

Michael Blum: Clearly with all the capex spending that that leverages higher any thoughts to reduce the dividend to free up some cash to accelerate the deleveraging process.

Speaker Change: No we haven't.

Speaker Change: Got any thoughts about doing doing anything with the dividend right. Now we are focused on de levering and we have the MVP project financing that we will be turning to assume this MVP is in service.

Speaker Change: And that will that will be a big chunk of debt reduction right there.

Speaker Change: We've said I think 800 to a $1 billion on that and we are looking at possibly increasing that amount.

Speaker Change: If we can in the markets there at the time.

Justin Mackin: That's helpful. Thank you. And then just wanted to ask about kind of what steady, standing CapEx would look like after MVP's in service and if we just kind of ignore some discrete projects that you've already outlined. I know you have that, but I think it's slide eight.

Speaker Change: Okay got it that's helpful. Thank you and then.

Speaker Change: Just wanted to ask about kind of what steady state.

Speaker Change: Sustaining capex would look like after Mvp's in service since we're just kind of ignore some of these.

Speaker Change: Great projects that you've already outlined.

Speaker Change: I noticed you have that and I think it's slide eight you talk about in a sustaining capex of $200 million to $250 million.

Justin Mackin: You talk about, you know, sustaining CapEx of two to 250 million. Is that what you would view as the total amount of CapEx required to keep kind of the cash flow of the overall business flat, or is there more?

Speaker Change: What we would view as like the total amount of Capex required to keep kind of the cash flows of the overall business flat or is there is there more cost.

Speaker Change: Cost where should we be thinking about.

Justin Mackin: So that number is specific to our gathering segments. And I think as we look at this year, we've guided to the two to 250 for some time now in terms of gathering sustaining CapEx. We're probably on the low end of that range for 23 and now for 24.

Speaker Change: So so that number is specific to our gathering segments.

Speaker Change: And I think as we look at this year, we've guided to the two to $2 50 for some time now in terms of gathering sustaining capex, we're probably on the low end of that range for 'twenty three and now for 24. If you. If you take some of the growth projects compression related projects that we have in the works this year.

Justin Mackin: If you take some of the growth projects, compression-related projects that we have in the works this year, we're probably closer to that $200 million for the gathering segment, if that answers your question. Great. Thank you so much. Our next question comes from Jeremy Tanay from J.P. Morgan. Please go ahead. Your line is open. Hi, good morning. Ornate.

Speaker Change: Probably closer to that $200 million for the gathering segment.

Speaker Change: If that answers your question.

Speaker Change: Great. Thank you so much.

Speaker Change: Our next question comes from Jeremy Tonet from Jpmorgan. Please go ahead. Your line is open.

Jeremy Tonet: Hi, good morning.

Jeremy Tonet: Good morning.

Operator: I just want to start off with a question on the hammerhead here. It seems like the expected EBITDA ticked down a bit from the last disclosure, if we have that correct. Just wondering if you could talk about some of the drivers there? Yeah, Jeremy. This is Nate.

Jeremy Tonet: Just wanted to start off with a question on hammerhead here it seems like the expected EBITDA.

Jeremy Tonet: Ticked down a bit from the last disclosure if we have that correct. Just wondering if you could talk about some of the drivers there.

Jeremy Tonet: Yes, Jeremy this is Nate.

Nate Tetlow: So that slide now reflects $65 million of EBITDA, which is really from the 1.2, and those are directly tied to MVPs in service. I think previously on that site, we had included about 200 MW a day of uncontracted capacity. You know, Justin mentioned it in the opening remarks, but the Hammerhead Pipeline. We've been moving volumes on that pipeline that is bi-directional, so we have interconnects with other pipes beyond MVP, and in 2023, we earned about $5 million of revenue moving those volumes. We do have another pad that's coming on here, I think mid-year, and those volumes will flow north on Hammerhead. So that's additive to the 65 million already mentioned.

Nate Tetlow: So that's slide now reflects $65 million.

Nate Tetlow: EBITDA, which is really from the one two bcf a day of firm commitments and those are directly tied to Mvp's in service I.

Nate Tetlow: I think previously on that slide we had included about 200, a day of on contracted capacity.

Nate Tetlow: Just mentioned it.

Nate Tetlow: Opening remarks, but the hammerhead pipeline.

Nate Tetlow: We've been moving volumes on that pipeline. It is by direction also.

Nate Tetlow: We have interconnects with other pipes beyond MVP.

Nate Tetlow: And in 'twenty, three we earned about $5 million of revenue moving those volumes.

Nate Tetlow: We do have another pad that's coming on here.

Nate Tetlow: Mid year.

Nate Tetlow: And those volumes will flow north on hammerhead so.

Nate Tetlow: That's additive to the $65 million. So I think we've really just cleaned up that slide to make it.

Nate Tetlow: So I think we really just cleaned up that slide to make it the EBITDA that's directly attributable to the timing of MDS, in service, but certainly, we're looking to earn above 65 million and have started to do that. Thank you very much for that. And at the risk of bringing too much of a point out on MVP timeline, just wanted to see what when you put the May 30th and June 1st dates out there, is that considered, or is that just the most recent as of today? There was a bit of there's a lot of snow over the weekend. Just wondering if that's all considered here. Sorry if this is too fine of a point, but we didn't get snow over the weekend on the right-of-way. At least no one told me we did. So I don't think we had snow down there. So we're good. That second quarter is a good one.

Nate Tetlow: The EBITDA that is directly attributable to the timing of MVP and service, but certainly we're looking to.

Nate Tetlow: Earn above the $65 million and that's starting to do that in 'twenty three.

Speaker Change: Got it thank you very much for that.

Speaker Change: And at the risk of bringing too fine of a point of it.

Speaker Change: On MVP. It timeline just wanted to see what when you put the may 30th June 1st dates out there is that considered is that just the most recent as of today there was a bit of Theres a lot of snow over the weekend just wondering if thats all considered here.

Speaker Change: Sorry, if this is too fine of a point.

We didn't get snow over the weekend on the roadway.

Speaker Change: No one told me we did so.

Speaker Change: It had slowed down there. So we're good that is that second quarter.

Diana M. Charletta: As of right now, that's where we are. Got it. That's very helpful.

Speaker Change: As of right now Thats, where we are.

Speaker Change: Got it that's very helpful. Thanks, and I appreciate it.

Diana M. Charletta: Thanks. And I appreciate if you can't touch on this, you don't want to touch on this, but as far as discussing the strategic Review, is there any reason to talk about that today versus any point in the past, or why, in general, just bring it forward? Yeah, we're not going to comment on that.

Speaker Change: Can't touch on that you don't want to touch on this but as far as discussing the strategic review is there.

Speaker Change: Any reason to talk about that today versus at any point in the past or why in general just bring it forward.

Speaker Change: Yes.

Speaker Change: Not going to comment on that today.

Diana M. Charletta: Got it. Our next question comes from Neil Mitra from Bank of America. Please go ahead, your line is open. Hi, good morning.

Speaker Change: Got it understood. Thanks, Thank you.

Speaker Change: Our next question comes from Neel Mitra from Bank of America. Please go ahead. Your line is open.

Neel Mitra: Hi, good morning, Thanks for taking my question.

Diana M. Charletta: Thanks for taking my question. I wanted to just understand where we are with two important crossings, the Appalachian Trail and the Roanoke River, and how long they would take to complete and if there are any challenges you see there. Sure. On the trail, we have made good progress. We're at about 60% complete. We have had some mechanical issues with equipment that have slowed us down a little bit. But when we are drilling, we are making good rates.

Neel Mitra: Wanted to.

Neel Mitra: Just understand where we are with two important crossings, the Appalachian trail and running forever.

Neel Mitra: And how long that would take to complete and if theres any challenges you see there.

Neel Mitra: Sure.

Neel Mitra: On the trail we have made good progress we're at about 60% complete and we have had some mechanical issues with the equipment that has slowed us down a little bit but when we are drilling we are making good rate. So.

Diana M. Charletta: So I feel pretty good about that. The Roanoke, we have about 20 feet less of that bore. I think it's about 330.

Neel Mitra: I feel pretty good about that.

Speaker Change: Roanoke, we have about 20 feet less.

Speaker Change: That for it.

Speaker Change: I think it's like 330 feet, we have about 20 feet last it is slow going but it is going and where under the river. So.

Diana M. Charletta: We have about 20 feet left. It is slow going, but it is going. I feel good. We're under the water.

Speaker Change: I feel good where under the under the water. It's just it's just been flat.

Diana M. Charletta: It's just been slow. Are there variance requests being filed for any of these crossings, or are you ready on that path to completely go? It's so, um...

Speaker Change: Are there a variance request being filed for any of these crossings where are you ready on that path.

Speaker Change: To completely go for it.

Speaker Change: So.

Diana M. Charletta: I believe we already have approved variance requests for the trail. Roanoke, there is one out there for Roanoke, it's a 24-7 so that we can operate 24-7 with two crews. Right now, we're just working with one. Our existing guidance doesn't require us to get that approval, but it would help speed things up for us. So if we can get it, that's what we're trying to do. Okay, perfect. And I could just follow up on one question on the balance sheet. I know your covenant leverage ratio has been revised upward. I'm just wondering where you see kind of the peak leverage going with the increase in costs.

Speaker Change: I believe we already have approved variance requests for the trail Roanoke. There is one out there for Roanoke, It's a 24 seven.

Speaker Change: So that we can operate 24 seven with two crews right now were just working with one our existing guidance has doesn't require us to get that approval.

Speaker Change: But it would help speed things up for us. So if we can get it that's what where we're trying to do.

Speaker Change: Okay, perfect and then if I could just follow up on one question on the balance sheet I know you are.

Speaker Change: Your covenant.

Speaker Change: Leverage ratio has been revised upward I'm, just wondering where you see kind of the peak leverage.

Speaker Change: Going to with the increase in cost.

Kirk R. Oliver: Yes, we believe that the amended revolver covenant is more than adequate cushion. We are probably in the high five with this amended targeted, and then we would expect that that would come down very quickly after we do the project level.

Speaker Change: Yes, so we believe that the amended revolver covenant is more than adequate cushion we are probably in the high fives.

Speaker Change: With this amended targeted MVP in service and then we would expect that that would come down very quickly. After we do the MVP project level financing.

Kirk R. Oliver: Thank you very much. Our next question comes from Brian Reynolds from UBS Financial. Please go ahead, your line is open. Hey, good morning, everyone.

Speaker Change: Got it thank you very much.

Speaker Change: Our next question comes from Brian Reynolds from UBS Financial. Please go ahead. Your line is open.

Brian Reynolds: Hey, good morning, everyone, maybe to follow up on the amended credit facility. It seemed like you had still enough room.

Operator: Maybe to follow up on the amended credit facility, seemed like you still had enough room to run, you know, based on your prior amendment. So just kind of curious about the reasoning to, you know, basically take it to six and partially above 6.25 times. Just wondering, the drivers behind that, are they just some extra doses of conservatism?

Brian Reynolds: To run based on your prior amendments. So just kind of curious of the reasoning to basically take into six and partially above six five times just wondering the drivers behind that is it just.

Brian Reynolds: Some extra doses of conservatism or does maybe some of the MVP level debt and timing of that maybe influence the decision to amend the facility periodically.

Kirk R. Oliver: Or does maybe some of the MVP level debt and timing of that maybe influence the decision to amend the facility periodically? Thanks. Thank you. Thank you very much.

Kirk R. Oliver: Thank you. That action was primarily just to give ourselves adequate cushion and for some conservatism so that we didn't have any concerns with..., the line going forward, but it should not signal any concerns with regard to the MD, financing, and our ability to take a hurry off the table. Okay, makes sense.

Brian Reynolds: That action was primarily just to give ourselves adequate cushion in for some conservatism.

Brian Reynolds: We didn't have any concern with <unk>.

Brian Reynolds: <unk> going forward.

Brian Reynolds: Should not signal any concerns with regards to the MVP financing and our ability to execute on that.

Speaker Change: Just to take any worry off the table Brian.

Brian Reynolds: Okay. It makes sense and then as a follow up to Spiros Southgate question. I know previously there were some issues around permitting that part of the leg of the project can you just help me understand how maybe the new scope of the project may be addresses some of these concerns around permitting there or will should we expect some additional <unk>.

Justin Mackin: And then as a follow-up to Spiro's Southgate question, I know previously there were some issues around permitting that part of the leg of the project. Can you just help me understand how maybe the new scope of the project maybe addresses some of these concerns around permitting there? Or should we expect some additional permits to be filed in those jurisdictions over the coming months to pursue that project? Yeah, I'll start. So the revised scope certainly shortens the project considerably.

Brian Reynolds: Permits to be filed in those jurisdictions over the coming months to pursue that project. Thanks.

Speaker Change: Yes, I'll start.

Speaker Change: So the revised scope certainly.

Speaker Change: Shortens the project considerably.

Justin Mackin: You know, there'll be less stream crossings and other things that could be a Permitting Challenge down the road. So I think the revised scope here goes a long way to de-risking the project, and we're, I'm more comfortable with our ability to exit because we're at seat risk. We've also removed the compression, so that's helpful, but we will need to file permits. The shorter route is great, but we'll still have to go through the permitting process. That date is pretty far out, so we haven't started on that yet, but we have all the legwork, and we have the route. We've been working on this route for quite a long time. Okay, that makes sense.

Speaker Change: There'll be less stream crossings and other things that could be.

Speaker Change: Permitting challenges down the road. So I think the revised scope here goes a long way to Derisking the project.

Speaker Change: And we're.

Speaker Change: More comfortable with our ability to act because we're derisking it that way we've also removed the compression. So that's helpful.

Speaker Change: But we will need to file permits.

Speaker Change: Yeah.

Speaker Change: The shorter route is great, but we'll still have to get through the permitting process that data is pretty far out there. So.

Speaker Change: We haven't started that yet.

Speaker Change: Have all the legwork and have the route we've been working on this route.

Speaker Change: Quite a long time.

Speaker Change: Okay makes sense enjoy the rest of the morning.

Diana M. Charletta: Enjoy the rest of your morning. We have no further questions in queue. I'd like to turn the call back over to Diana Charletta for her closing remarks. Thank you all very much for your time. We appreciate it. Have a great day! This concludes today's conference call. Thank you for your participation. You may now disconnect. Thomas Krotthapalli, Thomas Karam, Kirk Oliver, Diana Charletta, Equitrans Mid Thomas Krotthapalli, Thomas Karam, Kirk Oliver, Diana Charletta, Equitrans Mid

Speaker Change: We have no further questions in queue I'd like to turn the call back over to Diana Shaw for closing remarks.

Diana M. Charletta: Thank you all very much for your time, we appreciate it have a great day.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Diana M. Charletta: Okay.